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Deb Price

Georgina Lee

Good day, traders --
Hong Kong and China stocks fell on expectations that US President Donald Trump will sign legislation supporting the city's protesters. Beijing warned that it would take "strong countermeans ... if the US insists on making the wrong decisions" on the legislation. This sets up a likely collision course that could upset the phase one trade deal that is in the works.
Check out the day's action below.
Please help us improve our blog by taking this quick -- under 2 minutes! -- survey. Your feedback will really help us make the blog better for you!
Also, if you would like the Live Stocks Blog emailed to you each morning, click here.
-- Deb Price and Georgina Lee in Hong Kong
Note: Information in this blog is on an "as is" basis and not a solicitation or offer to buy or sell any securities or otherwise; and is not investment/professional advice or services in this regard.  It is subject to our T&C.  SCMP (as defined in T&C) shall not be liable for any loss, damage and costs relating to any investments in securities or otherwise in this connection.
 


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Stocks

Hang Seng Index drops on US-China trade concerns; Tencent, WH Group and Sunny Optical fall  

Cleanup is under way in Hong Kong. Here workers clear protest-related debris from a footbridge at the Cross-Harbour Tunnel. Photo: K.Y. Cheng

Business

Markets

Pick Chinese consumer, internet and 5G stocks in 2020, UBS says
Sa Sa International falls 3.7 per cent after reporting retail sales in Hong Kong, Macau declined 19.4 per cent in first half 


Donald Trump reportedly will sign legislation supporting Hong Kong protesters. That could upend progress on phase one US-China trade deal.


China stock market

Hong Kong protests

Donald Trump

Trade war

Kweichow Moutai

Hang Seng Index

Tencent

Alibaba

Hong Kong property

New World Development

Sunny Optical

WH Group

Live

Here’s what we are watching this morning:
Overnight markets/ What futures foretell
--The S&P 500 dropped 0.4 per cent, the Nasdaq fell 0.5 per cent and the Dow Jones Industrial Average declined 0.4 per cent.   -- Hong Kong futures are down 0.9 per cent, while A50 futures are down 0.6 per cent
IPO debuts: Shenzhen Huarchi Global Group Holdings Limited (2296 HK), Guangdong Brandmax Marketing (300805 CH), Longyan Zhuoyue New Energy (688196 CH)
Economic data: Nothing major
Earnings: Meituan Dianping (3690 HK)


Morning guidance 

Stocks with the most potential in China’s highly volatile markets next year are those related to the so-called consumption upgrade – including education, beer and sportswear – and internet as well as 5G networks, UBS Global Wealth Management says.
The Swiss asset manager expects trade tensions between China and US to persist despite a potential “Phase One” deal, while the growth global economy is likely to further slow in 2020, according to Hu Yifan, regional chief investment officer and chief China economist.
This means that companies focusing on domestic markets are likely to outperform, she said in a press conference on Wednesday.
“The trade war’s damaging effect is much larger on the confidence of large companies than the average consumers,” said Hu.
-- Yujing Liu 


Pick Chinese consumer, internet and 5G stocks in 2020, UBS says

Auto parts manufacturer Zhejiang Shibao (01057 HK) is realigning funds it raised in 2014 to replenish its working capital instead of using them for “precious casting and processing of automotive components project.”
Citing the sluggish sales of cars in China, the company said the  remaining 80.5 million yuan out of the  200 million yuan it raised from the non-public issuance of A shares in 2014 will be used to replenish the working capital and daily operating activities of the company. 
“The decision on the termination of the ‘precious casting and processing of automotive components project’, one of the fund-raising investment projects from the non-public issuance of A Shares in 2014, is cautiously made, based on development and change of objective and actual conditions, in order to avoid making a new production capacity idle and ineffective investment,” the company said in a filing after trading hours. 
-- Cheryl Arcibal   


Auto parts maker Zhejiang Shibao changing how it is using raised funds

The US House of Representatives on Wednesday approved the Senate’s version of legislation that could pave the way for diplomatic action and economic sanctions against Hong Kong, moving the bill to US President Donald Trump.
He is expected to sign the bill into law, Bloomberg reported, citing a person familiar with the matter.
The House vote on the Hong Kong Human Rights and Democracy Act was 417-1, said Jeff Sagnip, press secretary for Representative Chris Smith, a sponsor of the bill.
The Senate passed the bill unanimously on Tuesday.
Read full story by Robert Delaney here. 


Trump reportedly will sign legislation supporting Hong Kong protesters

The Hang Seng Index fell hard this morning, dropping 1.7 per cent to 26,432.87, following overnight US benchmarks declines and as President Donald Trump reportedly will sign a bill supporting the Hong Kong protesters.
Benchmark heavyweight Tencent (700 HK) dropped 1.6 per cent to HK$330.20.
Snack maker Want Want China (151 HK) declined 0.9 per cent to HK$6.4.
Property stocks fell, including Wharf REIC (1997 HK), which plunged 4.2 per cent to HK$42.40.
-- Deb Price    


Wharf falls more than 4 per cent; Hang Seng is down 1.7 per cent

The Shanghai Composite Index fell 0.4 per cent to 2,899.
The Industrial and Commercial Bank of China (601398 CH) fell 0.7 per cent to 5.76 yuan, while Kweichow Moutai (600519 CH) declined 0.5 per cent to 1,228.01 yuan.
Among mainland stocks in addition to Kweichow Moutai that are heavily traded by northbound investors:
-- Jiangsu Hengrui Medicine (600276 CH)  dropped 1.9 per cent to 93.16 yuan.
-- Ping An Insurance (601318 CH) dropped 1 per cent to 87.20 yuan.
-- Deb Price  


Kweichow Moutai drops as Shanghai slides 

Huarchi Global Group Holdings Limited (2296 HK) started trading on the main board of Hong Kong Stock Exchange today.
The share price rose 26 per cent to HK$0.315 at the open, from the offering price of HK$ 0.25. The shares were oversubscribed by 61 times before debut.
Huarchi is the second-largest fitting-out contractor in Macau, with a market share of 4.4 per cent in terms of revenue, according to Frost & Sullivan’s report. The company also has 0.5 per cent market share of construction industry in Macau. All of its revenues were generated in Macau, and customers are from both public and private sectors.
Huarchi Global Group (2296 HK) started trading on the main board of Hong Kong Stock Exchange today. @SCMPNews @scmpbusiness @HKEXGroup pic.twitter.com/r4bcqcluwI
  — Snow Xia (@SnowXia05) November 21, 2019
-- Snow Xia   


Huarchi Global soars in debut in Hong Kong

Longyan Zhuoyue New Energy (688196) rose 16.5 per cent to 50.03 yuan, compared to its offer price at 42.93.
It is the third-most traded stock in Shanghai, with 572.4 million yuan having swapped hands.
The Fujian-based company focuses on using waste animal and vegetable oils to produce biodiesel, which is a renewable and non-fossil fuel alternative to mineral diesel.
-- Georgina Lee


Longyan Zhuoyue New Energy jumps on Star board debut

All 50 constituent stocks of the Hang Seng have fallen, with the benchmark seeing a 1.8 per cent decline to 26,406.72, having fallen as low as 26,306.02.
Here’s how some stocks are doing:
WH Group (288 HK), the world’s largest pork processor, fell 4 per cent to HK$7.97.
Wharf REIC (1997 HK) dropped 3.6 per cent to HK$42.65. 
Tencent (700 HK) has dropped 1.9 per cent to HK$329.20.
Ping An (2318 HK) fell 1.2 per  cent to HK$90.75.
-- Deb Price    


All 50 stocks on Hang Seng seeing losses

Guangdong Brandmax Marketing (300805 CH) shot up 44 per cent to 14.69 yuan, hitting the 44 per cent first trading day up limit.
The Guangzhou-based company, which also has offices in Shanghai, Beijing and Chengdu, provides marketing planning, corporate image planning and conference arrangements.
-- Georgina Lee    


Shenzhen ChiNext debutant Guangdong Brandmax Marketing soars 

Shares of Asiaray Media Group (1993 HK), which provides electronic and billboard advertisements at airports and subway stations, jumped by as much as 106 per cent in a slumping market to a record intraday high of HK$9.70, after Alibaba Group Holdings' affiliate Ant Financial Services bought a 7.5 per cent of the advertisement company.
Ant Financial agreed to pay HK$146.3 million, or HK$4.10 per Asiaray share, for its stake, according to a press release.
Alibaba owns the South China Morning Post.
-- Eugene Tang 


AsiaRay Media soars after Alibaba affiliate buys stake 

The legislation President Donald Trump is expected to sign supporting Hong Kong’s demonstrators is raising uncertainty about a US-China trade deal, putting the Hang Seng on course to test the 26,000 point level, says Alan Li, portfolio manager at Atta Capital.
“The progress of the Hong Kong democracy bill is faster than expected. It has just been passed by the US Congress and is on Trump’s table now,” Li said.
That means “more uncertainty raised on a trade deal, and the market is worried about whether an agreement can be signed in December. The Hang Seng is likely to test again its support at 26,000,” said Li.
The Hang Seng is trading down 1.6 per cent at 26,466.47, after recovering some of its loss that sent it as low as 26,306.02. 
It is on track for its worst percentage fall in more than a week. It fell 2.6 per cent to 26,926.55 on November 11.
-- Deb Price    


Trade uncertainty weighing on Hong Kong stocks, says analyst Alan Li

US President Donald Trump said on Wednesday that Beijing so far has not made sufficient concessions in trade talks, making him reluctant to conclude a bargain.
“I can tell you this. China would much rather make a trade deal than I would,” he told reporters while touring a manufacturing facility that produces computers for Apple.
“I don’t think they’re stepping up to the level that I want.”
Wall Street retreated further from record highs on Wednesday as pessimism mounted among investors about the chances for a deal to bring an end to the lingering trade dispute.
Read full story here.    


Trump says China ‘not stepping up’ in trade talks

Fears the US-China trade war is not going away anytime soon are weighing on Hong Kong stocks, but Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, says he isn’t expecting this to turn into a major slide over the next few sessions.
“I think the key reason is the new development of the trade deal. It seems that they can’t sign the deal by end of this year,” Wen said. 
“I expect range trading. No need to be bearish for these next few days,” Wen said.
The Hang Seng was last down 1.6 per cent at 26,460.77.
It has traded above 26,0000 but below 28,000 since early October. It is having trouble staying above 27,000. 

-- Deb Price    


No need to get bearish, says analyst Kenny Wen

Trading in high-flying Artgo Holdings (3313 HK) was halted after it fell nearly 98 per cent to HK$0.305 following MSCI’s announcement Wednesday that it was dropping plans to add it to one of its indexes after “further analysis and feedback from market participants on investability.”
The investment holding company, which mainly engages in mining, processing, trading and sales of marble stones, was only added to the MSCI China All Shares Index on November 7. It was to be added to the index at the close of trading on November 26.
This year, as of Wednesday’s close, the stock had shot up nearly 3,800 per cent.
Trading was halted at 11:04, according to a statement at the Hong Kong exchange.
-- Deb Price    


Trading halted in Artgo after it crashed 98 per cent, following MSCI reversal on adding it to index

Kasen International Holdings (496 HK), a Chinese maker of furniture and leather products, tumbled 90 per cent in Hong Kong today after US short seller Blue Orca Capital  accused it of selling best assets at bargain prices and fabricating investment projects in Cambodia.
The Zhejiang-based company sold the best assets to the chairman’s daughters three years ago after understating revenues and profits, and trumped up the Cambodian projects that investigators found never existed, Blue Orca alleged in a report. The stock would be fairly priced at 67 Hong Kong cents, or a decrease of 85 per cent from its yesterday’s close, the report said.
Shares of Kasen were suspended as of 11:44am before last trading at 45.5 Hong Kong cents.
A call made to the company went unanswered.

 
-- Zhang Shidong 


 Chinese furniture maker Kasen tumbles 90 per cent after short seller attack

Sa Sa International Holdings (178 HK) said its retail sales in the Hong Kong and Macau markets decreased by 19.4 per cent in six months ended September 30 compared to the previous year.
It said its loss for the period was HK$36.5 million, compared to a profit of HK$202.9 million recorded in the same period last year.
It cited the US-China trade war and protests for its decline.
“The number of transactions contributed by Mainland tourists in the Group’s Hong Kong stores decreased significantly by 51.2% year-on-year from July to September 2019, while that of local consumers recorded a slight decline of 3.0%. However, since Mainland tourists contribute a much larger proportion of revenue in this market, the Group’s overall retail sales performance in the second quarter decreased by 35.4% in Hong Kong,” it said in its stock exchange filing,  which was released at the lunch break. 
-- Deb Price    


Sa Sa reports loss of HK$36.5 million in first half, citing trade war and protests

The Hang Seng Index is down 1.7 per cent, at 26,438.88 points, led down by information technology stocks.
Tencent (700 HK) fell 2.2 per cent to HK$328.20, while life insurance giant AIA (1299 HK) fell 1.7 per cent to HK$76.50.
Snack maker Want Want China (151 HK) was the sole stock of the 50 members of the Hang Seng posting gains, rising 0.9 per cent to HK$6.53.
Want Want shot up Tuesday after announcing its net profit attributable to shareholders for the six month ended September rose 18.4 per cent. Profit taking resulted in a 3.1 per cent loss on Wednesday.
Of analysts tracked by Bloomberg, 13 rate it a buy, eight a hold and three a sell, with a consensus target price of HK$7.11.
-- Deb Price    


Tencent leads losers on declining Hang Seng 

Kingfa Science and Tech (600143 CH), which produces biodegradable plastics in addition to other plastics, shot up 6.3 per cent to 7.04 yuan over reports the government is revising laws concerning plastics to try to reduce waste.
A gauge by Xuangubao of companies linked to degradable plastic products rose 3.7 per cent. 
The government wants to reduce waste from plastic bags, food boxes and agricultural plastics, boosting the outlook for companies that produce biodegradable alternatives. As China has moved to quick food service and package delivery, it has created a trash headache. 
-- Deb Price    


Kingfa Science and Tech shoots up on reports of rules changes coming in favor of biodegradable plastics

Offshore traders using the Stock Connect were pulling money out of three of this year’s big gainers in mainland markets.
Liquor giant Kweichow Moutai (600519 CH) saw more selling than buying Wednesday on the Stock Connect, where it was the most actively traded stock, with 686.97 million yuan of turnover.
Of that, traders bought 316,722,926 yuan worth of its shares, while selling turnover totalled 370,248,891 yuan, according to data by the Hong Kong Exchange and Clearing, the owner and operator of the city’s stock exchange.
It is up 108 per cent for the year.
Traders dumped Jiangsu Hengrui Medicine (600276 CH), the second most actively traded stock, with nearly three shares sold for every one bought. It saw buy trades of 143,665,044 yuan but sell trades totalling 403,129,424 yuan.
It has gained 110 per cent this year.
Traders on the Connect stampeded out of China Merchants Bank (60036 CH) as well, with sell orders also three times greater than buy orders. The total of buy trades was 120,837,047 yuan, versus sell turnover of 361,730,127 yuan. It was the third most actively traded stock of the day.
It has risen 44 per cent this year.
-- Deb Price     


Stock Connect traders stampeded out of Kweichow Moutai, Jiangsu Hengrui Medicine

China stocks slipped, as uncertainty surrounded the prospects for a trade deal as a bill supporting Hong Kong protesters headed for expected approval by President Donald Trump.
The Shanghai Composite Index declined 0.3 per cent to 2,903.64, while the Shenzhen Component Index dropped 0.2 per cent, and the CSI 300 Index of large cap stocks traded in Shanghai and Shenzhen fell 0.5 per cent.
Gainers of the day included degradable plastics stocks, building off news reports the government is ramping up its crackdown on single-use plastics like plastic bags and food containers, while declining sectors included stocks tied to rare earths.
Liquor giant Kweichow Moutai (600519 CH) slipped 0.2 per cent to 1,231.30 yuan, while the Industrial and Commercial Bank of China (601398 CH) fell 1.2 per cent to 5.73 yuan.
Meanwhile, Jiangsu Hengrui Medicine (600276 CH) dropped 2.5 per cent to 92.60 yuan and Ping An Insurance (601318 CH) dropped 1.9 per cent to 86.34.
-- Deb Price   


China stocks slip as trade deal outlook is muddied

The Hang Seng fell 1.5 per cent to 26,483.17, with all but two stocks of 50 on the benchmark closing with losses as US-China trade war worries grew after a report President Donald Trump is likely to sign a bill supporting Hong Kong protesters.
Tencent (700 HK) fell 1.8 per cent to HK$329.40, while Sunny Optical (2382 HK) fell 4.2 per cent to HK$121.40.
The day’s two winners were snack maker Want Want China (151 HK), which rose 1.4 per cent to HK$6.56 after Wednesday’s profit taking, and Hengan International (1044 HK), the diaper and sanitary napkin manufacturer who is experiencing intense competition from international rivals in the China market, rose 0.4 per cent to HK$51.05.
WH Group (288 CH), the world’s biggest pork processor, fell 3.1 per cent to HK$8.05. It has been weighed down by China tariffs on pork as well as the African swine fever that has roiled the market for mainland consumers’ favourite meat.
New World Development (17 HK) slipped 0.7 per cent.
Also in Hong Kong stocks, Sa Sa International Holdings (178 HK) fell 3.7 per cent to HK$1.8 after reporting its first half year-on-year retail sales in the Hong Kong and Macau markets decreased by 19.4 per cent. It blamed the double whammy of the US-China trade war and Hong Kong protests for beating down traffic, especially from the mainland.
Asiaray Media Group (1993 HK), which provides electronic and billboard advertisements at airports and subway stations, closed up 19.9 per cent to HK$5.59 after Alibaba Group Holdings’ affiliate Ant Financial Services bought 7.5 per cent of the advertisement company. It had shot up more than 100 per cent before speculators took their profits and ran.
-- Deb Price 


Hang Seng drops 1.5 per cent, with only 2 of 50 benchmark stocks gaining 

Home Credit said today it is shelving its planned US$1 billion initial public offering in Hong Kong.
The Prague-based consumer finance lender said it would not proceed with the offering “due to market conditions”.
Established in 1997, the company, which focuses on point-of-sales loans, cash loans and credit cards, in emerging markets in Europe and Asia, counts China as its largest market.
-- Chad Bray


Home Credit shelves planned US$1 billion IPO  in Hong Kong

Hang Seng Index drops on US-China trade concerns; Tencent, WH Group and Sunny Optical fall

Pick Chinese consumer, internet and 5G stocks in 2020, UBS says Sa Sa International falls 3.7 per cent after reporting retail sales in Hong Kong, Macau declined 19.4 per cent in first half

Pick Chinese consumer, internet and 5G stocks in 2020, UBS says

Sa Sa International falls 3.7 per cent after reporting retail sales in Hong Kong, Macau declined 19.4 per cent in first half